Saturday, November 17, 2012

Fiscal Cliff

Will the United States end up like Europe?  What is meant by a fiscal cliff?

In my words, the "fiscal cliff" refers to austerity measures such as payroll tax increases and a decrease in government spending.  If the United States follows these measures, does it follow that she will slip into a recession?

I don't think that the United States has ever recovered from the 2008 recession.  We are in a recession. Austerity measures might drop us into a depression, however.

There's an old saying that "If you do what you've always done, you are going to get what you always got." It is clear to me that fiscal policy does not work.  If the United States is going to recover, recovery is going to have to come from innovation and entrepreneurship.  Growth is going to have to come from withing the creative spirit and profit incentives from the private sector.

Will the United States fall off a cliff when austerity measures are taken?  I don't think so.  I believe that businesses will respond to the challenge.

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